The Indian economy at the time of independence showed all the signs of stagnation. About 47% of the population was below the poverty line in 1951.This figure went up in 1964-65, came down and again went up in 1977-78. Presently the World Bank estimates that a third of the global poor reside in India. At the time of independence 72% of the work force was employed in agriculture and it contributed to nearly 50% of the national income. Industrialization was at a very low level with only 2% of the work force employed in industries. In addition to this there was hardly any investment in industries. The only industries which existed were cotton and jute industries. They also suffered a major setback, as at the time of partition major jute producing areas went to Pakistan and as a result there was a shortage of raw material. Thus, at the time of Independence, low agriculture output, little industrialization, low figure of national income, high poverty and unemployment, slow economic progress were the features of India’s economy.

The government under our first Prime Minister Pt.Jawaharlal Nehru was focused on development of indigenous industries which had been completely destroyed under the British rule. The emphasis was on state control in finance, a strong public sector and import substitution. Pandit Nehru was fascinated by the Soviet Union’s Piatiletka or Five-year plan and tried implementing the same for the Indian economy. He wanted India to have the best combination of socialism and capitalism and tried to implement Democratic Socialism in India. Annual growth rate of the Indian economy averaged around 3.5% from 1950-1980.

With Rajiv Gandhi coming to power many changes started taking place. There was emphasis on delicensing. Under P.V.Narsimha Rao’s regime economic liberalization policies came into force in 1991. Now the focus was on privatization and globalization. Most industries didn’t require government approval and were thrown open to the private sector. Since 1991 the Indian economy has been growing constantly except during a few phases.

The GDP growth rate for the 2008-09 period has been 6.7%. Despite improvement in many areas it is true that poverty, unemployment and illiteracy are major stumbling blocks to the nation’s development. Before competing with China to become the biggest and most powerful economy, we have to realize that there are many problems within the country which need to be tackled first. Benefits of economic reforms seem limited to urban centers while the condition in rural areas is going from bad to worse. It is imperative that the villages of India be made self-sufficient as they once were. More initiatives like Grameen Bank which provide micro credit to the poor need to be encouraged. On their part, the government should make sure the funds allocated for rural development are utilized efficiently. The Indian youth which is madly running after MNCs and 6 digit salaries needs to stop and think about the rest of the country, how some people don’t get even 2 square meals a day and play an active role in the developmental process.

This is our country, every citizen is a stakeholder in the nation’s interest and therefore its problems will also have to be solved jointly and in cooperation with one another.